Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on August 19, 2009

Locking Stance:  LOCKING    Mortgage Bonds: +25bp

Mortgage backed securities jumped higher this morning on the fact stocks were dropping in sympathy with China’s plunge.  Data is very light today and that leaves technicals and news in charge, which means MBS pricing will likely be driven opposite of stocks today.

MBA Purchase Applications showed a 3.9% increase in purchase applications and a 6.9% increase in refinance applications.  With mortgage rates dropping to an average of 5.15 percent, the increase is not surprising.  Crude Inventories is the only other bit of scheduled data and that will be released at 10:30.

On the technical side, we have a tremendous squeeze play starting to form, with both good and bad indications.  Stochastic indications are moving into the overbought spectrum, indicating that mortgage bond pricing may need a correction soon.  Even with this morning’s jump higher, MBS pricing is off its highs and showed the 100-day moving average to be a strong resistance level.  With the 100-day MA continuing its move lower, it won’t be much longer before it could push and hold mortgage bond prices below the 200-day MA and we would get a very negative crossover of the two moving averages.  The current gap between the 100-day and 200-day moving averages is just 24 basis points, and shrinking.  On the good side, the 10-day MA failed to crossover below the 50-day MA and the 50-day, 25-day, and 10-day are all moving higher and will attempt to counter the 100-day moving averages decline.  As this squeeze play develops, MBS pricing will be forced to break out one way or the other.

What does this mean for Florida Mortgage Rates?  Weakness can still be seen in the move lower by mortgage rates, and the future remains uncertain, though indications are becoming more favorable for higher mortgage rates again.

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